As our lead article demonstrates property owners are any easy tax target and continue to bear the brunt of UK tax raising measures. As a recent report by the influential think tank Policy Exchange found, UK residents pay twice as much property tax as the international average.
The Policy Exchange report estimates that property taxes in Britain are the equivalent of 4.1 per cent of gross domestic product (GDP) which would be around £70 billion in 2011, whereas the OECD average is around 1.8 per cent.
Recent figures now show that house buyers in the UK are paying ever higher amounts in stamp duty than when these tax bands were set, as house prices have continued to rise at a rate which is well above consumer prices and wages. According to the Council of Mortgage Lenders (CML), on average the amount paid on house sales in the UK will top £6,700, which is up from under £4,200 in 2007-08.
The new threat to expat Brits living abroad, where Capital Gains tax (CGT) could be charged on UK based house sales, is just another step in our Coalition Government’s seeming contined drive to a high-taxation economy.
As the chill winds of winter arrive, and if you believe the forecasters we are in for a severe one this time, then landlords should be thinking now about what can go wrong with their properties and do some forward planning.
As the “Winter Proof Your Rental Properties” article in this issue says, the last thing you want is a phone call from your tenants telling you there’s an emergency just as you’re sitting down to your Christmas dinner.
A few pre-winter precautions can help avoid this situation, or at the very least lease cut the probability of such a scenario to the minimum.
First off, make sure your landlord’s insurance policy is up to date and covers you for the most common winter risks: storm damage, flood damage, water leaks and of course the biggest risk of all: third parity liability for injuries to others.
If a slate or tile blows off your roof and injuries someone your liabilities can be horrendous. You will find a selection of tried and trusted landlord insurance providers in our Services Directory on the LandlordZONE® website.
Next is the all important heating system. For tenants, the efficiency of the heating system has the most significant impact on their overall perception, enjoyment and cost of the house in winter. Whatever type of heating is provided it should be efficient, safely designed and economical to run.
Read the full “Winter Proofing” article to get a break-down of what you need to do and what you can do in case of the dreaded winter complaint from tenants of condensation and damp.
Researchers from the Centre for Housing Policy at the University of York have been commissioned by Lloyds Banking Group to study and report on the experiences of landlords with buy-to-let mortgage arrears. They are requesting help from landlords in this predicament, or those that have experienced difficulties in the past, to participate in this research.
It is well known that some landlords struggle with paying the mortgage on their rented property and the aim of this study is to understand what factors contribute to this situation.
Mortgages are secured on one half of all privately rented properties, so understanding what factors are leading landlords to have payment difficulties is important. The findings will help lenders structure their policies and can inform the debates about the private rented sector. If you can help see the article in this issue: “Research into why landlords’ struggle with mortgage payments…” for contact details.
Of continuing concern to landlords is the inexorable slide, it would seem, by both the Coalition Government and the opposition, towards a long-term contract for tenants in residential property in England and Wales.
This would be the first major change to residential tenancy rules since the introduction of the Shorthold Tenancy after 1988, a development that revived a then dying rental market. The fear is that any moves towards loner term security of tenure will put off landlords from renting once the inevitable rental problems with this start to arise.
However, so far the new regulations which would hand private housing tenants more power and rights to request longer leases have been given a cautious welcome by a leading property expert.
Julia Williams, director of Worcestershire property management specialists, Premier Places, believes the new code of practice, set to be launched by the Government, would bring in much-needed protection for tenants against perceived ‘high risk’ landlords.
But she has said she is concerned that the proposed new Tenants’ Charter, another element to the Whitehall-led plans, could mean “honest landlords are at a disadvantage and could be put off from renting their properties”. The result, she said, could be a shortage of housing, higher rents and landlords finding it difficult to step away from legally binding agreements.
Eric Pickles, the Secretary of State for Communities and Local Government, recently unveiled the new measures which are designed to allow England’s nine million private tenants to request long-term rental deals which give them more stability. Councils will also receive guidance on how to protect private tenants from illegal eviction and how to push for tough penalties for offences.
Mr Pickles, has proposed a charter that, in his words, will “raise the quality and choice of rental accommodation, root out the cowboys and rogue operators in the sector, and give tenants the confidence to request longer fixed-term tenancies that meet their needs.” Read the full article “Landlords Not Safe as Houses under New Rental Rules”
In my view this would be a step in the wrong direction unless a new court regime can ensure tenants are evicted much more quickly when problems such as rent arrears arise. This would seem very unlikely to happen.
Our review this month is a software product which provides landlords with a simple method of computing and completing their self assessment tax return.
Introduced at an opportune time for landlord’s tax returns, which will fall due at the end of January 2014, this simple to use Excel spread sheet method produced by author and landlord tax specialist Steve Sims, offers a simple and inexpensive alternative to complicated property management software and using a professional tax accountant.
However, this tax accountant prepared product need not replace either of these, as the product compliments both management software and a tax accountant. It provides a simple way to organise, calculate and confirm tax liabilities having taken into account everything you can legitimately claim by way of expenses. Read the full product review below: “Product Review: Property Tax for Landlords 2013 – a new software product”
Tom Entwistle, Editor, November 2013
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